Generic drugs can be classified as being generic equivalents and/or generic alternatives to brand medications. Generic equivalents are drugs produced, typically after the expiration of patent rights, which contain the same active ingredients as the original brand name drug. That is, drugs approved by the Food and Drug Administration (FDA) as generic equivalents are considered the bioequivalent to the brand name counterpart with respect to, inter alia, pharmacokinetic and pharmacodynamic properties. Typically, generic equivalents are identical in dose, strength, route of administration, safety, efficacy, and intended use.
Generic alternatives work similar to a brand drug and can be used to treat the same condition. However, the chemicals in a generic alternative can differ from the brand drug or its generic equivalent. Both generic equivalents and generic alternatives are typically less expensive than the original brand name product. Thus, generic drugs can provide patients with a less expensive option to achieve similar therapeutic results.
Today, referring to FIG. 1A, the Pharmacy Benefits Managers (PBM) industry primarily measures generics utilization by two metrics—Generic Dispensing Rate (GDR) and Generic Substitution Rate (GSR). GDR shows generic dispensing as a proportion of total prescription (Rx) dispensing. GDR demonstrates the overall level of generic dispensing; however, it does not provide users with insight into the potential remaining opportunity or upper limit of generic dispensing. The broad nature of GDR is due to the fact that the calculation includes all medications, including those medications that may not have any available generic equivalent or alternatives. GSR is the percentage of multi-source claims (i.e., multi-source brands plus generics) dispensed as generics. GSR is a highly focused measure of the success in substituting generic equivalents when one is available, but excludes any opportunity for use of clinically appropriate generic alternatives. In fact, with the PBM industry's success in adopting generic equivalents, GSR has reached significant saturation levels (e.g., in the 90-97% range for generic equivalents) that translate to minimal growth opportunities for users.
While GDR and GSR serve as straight forward measures of generic dispensing and utilization, we have identified at least two important limitations. First, GDR and GSR have difficulty in projecting future performance due to their construct to measure current versus past performance. Second, GDR and GSR are not able to portray the total potential generic opportunity and the importance of generic alternatives in producing savings. A need exists to overcome, inter alia, the aforementioned deficiencies, as well as others described below.